It's a perfect fit for a former conglomerate now firmly focussed on healthcare.
Philips is buying Spectranetics - which makes devices to treat heart disease.
The cost, including debt, $1.9 billion euros.
The U.S-based firm specialises in lasers and tiny drug-covered balloons to clean the insides of clogged veins and arteries.
It expects sales of around $300 million this year and will continue to grow revenues at double digit rates.
It should add to Philip's earnings in 2018 and will certainly strengthen its position in heart disease therapy - as did the acquisition of vascular imaging company Volcano in 2015.
Philip's CEO Frans van Houten has transformed the Dutch-firm, spinning off its lighting division and selling most of its remaining consumer products business.
Philips has also announced a new 1.5 billion euro share buyback programme to run for two years from the third quarter.
Van Houten denied he was under pressure from activist hedge fund Third Point, which recently acquired a stake in Philips.
It's controlled by billionaire investor Dan Loeb and earlier this week it also announced a massive investment in Switzerland's Nestle.

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV. Learn more about Thomson Reuters products: